Property laws in Thailand Read this its a Must Think long Term
Before you think about Buying please look at the Law and how it will affect you
Thai Property Law
Land in Thailand is classified according to how is has been surveyedThai property law continues to be complex, open to interpretation and is a regionally enforced patchwork of laws and procedures.
Each Province in Thailand has its own Land Office which is run by the local Taesaban (the Mayor’s office). Udon Thani Province has its land office located within the city and all land transactions within the Province need to be conducted at this location. Udon Home Sales has its office at 195 Pracharaksa Road in Udon Thani very close to the Land Office and will guide the Buyer through this process and will provide invaluable advice to help the Buyer avoid the many pitfalls along the way. Udon Home Sales can also offer the services of their English speaking Thai lawyer for all legal services needed.
Types of Land and recorded at the land office. There are four basic types of land available, however only the first two offer clear ownership and transferability.
Chanote Ti Din – Land with this designation or simply “Chanote” has been accurately surveyed and recorded at the land office and after being registered cannot be contested for accuracy. The Chanot document itself is normally a few pages on parchment type paper and shows a surveyed plan of the land, various registration numbers, previous owners and mortgage history. This is similar to a title deed in the Western world. Only one original is issued which bears the official chops, notations and the Garuda (the official Government authority crest) at the top. This is an extremely valuable document – if the property is mortgaged, a notation is made on the document by the land office and the original is held as collateral by the lending institution until the mortgage is satisfied.
Nor Sor Sam – Land with this designation has also been surveyed and recorded at the land office. It is a similar document to the Chanote in that it bears records of ownership and mortgages. The difference lies in the accuracy of the survey. Buyers will typically find this type of land within developed property subdivisions in which the developer sub-divided a large track of land to build many houses in the development and the developer built walls at the property lines for each lot. Nor Sor Sam land is still quite acceptable to purchase and if the owner wishes, they can usually upgrade the title deed to Chanote over time through legal procedures and paying for an independent survey.
Sor Bor Kor - This type of land has been surveyed and the ownership recorded, however there are restrictions on transfer of ownership. Typically the property can only be bequeathed in a will to another family member. Avoid this type of property. If you build a house on this type of land held within a family, it can never be sold.
Sor Kor Nung or Tor Bor Tor - This is land which was gained by adverse possession or squatters rights and was duly recorded after the statutory period of adverse possession was satisfied. Avoid this type of land. Ownership can be contested and there is very limited legal recourse to the unwary Buyer.
Thai Land Measurements
Thai land measurements are fairly simple once you understand the conversion factors. All title deeds in Thailand show all measurements using the Thai system and are also written in Thai, therefore it is beneficial for your pretty Thai speaking long haired translator to help you read the documents. The basic measurement for land is the Wah which is equal to a length of 2 meters. One Square Wah which is also known as a Talangwah measures 2 meters x 2 meters or 4 Square meteres.
Most houses in housing developments are built on lots of between 60 to 100 Square Wah or Talangwah. So a lot sized 80 Talangwah is 320 Square Meters.
Larger parcels of land have other names, 100 Talangwah equals 1 Ngan. 4 Ngan equals 1 Rai which contains 1600 Square Meters. For those more familiar with the old English measurement system, 1 Acre equals about 2.5 Rai, so one Rai equals about 0.4 Acres and 100 Talangwah equals about 0.1 Acres.
Foreign Ownership of Land
In general, Thai law does not allow a foreigner to own land in Thailand, although they can own the buildings thereon. There are two notable exceptions to this strict law. Firstly, where a foreign company has Board of Investment ("B.O.I.") approval and the land is part of the project (usually manufacturing). Even then, the ownership is very much tied in with the overall B.O.I. terms. Secondly, a new law (Land Code Section 96, 2002) allows an Alien to buy up to one Rai for his or her residential purposes in metropolitan areas such as Bangkok or Udon Thani providing they also invest at least 40 million Baht for five years in government bonds, recognised property, mutual funds or B.O.I. projects. Permission for this must be obtained from the Interior Ministry and the ownership is monitored by the Lands Department.
Practical Solutions to Land Ownership
Spouse or Girlfriend Ownership -- The simplest solution is to put the title of the land in the name of your Thai spouse or girlfriend. There are some distinct differences, however in how to structure collateral documents depending on whether the title is in the name of a spouse or a girlfriend.
In the case of a spouse, you will not be able to create contracts which state that you own the land in the event of a divorce or death or to create a contract to place restrictions upon the sale of the land. The general rule is that Thai nationals who marry foreigners are not allowed to own land in Thailand, unless the foreign spouse signs a document which declares that the property is separate. The Thai spouse must also declare that the money to buy the land was hers in the first place. So great care must be taken to first transfer funds to the spouse’s accouont (or use cash for the purchase). Care should also be taken with bringing in the funds for the acquisition - following Thai banking procedure to the letter. This means creating a Foreign Currency Account in your name first in order to qualify for a "Tor Dor Sam" certificate - issued by your Thai bank to verify that the originating funding came from outside Thailand in a currency other than Thai Baht. This Tor Dor Sam certificate will be needed if you wish to transfer funds back outside of Thailand should you decide to sell the property and move back home.
For your protection in the case of putting the land title in the Thai spouses name, the best solution is to record what is know as a “Usufruct” at the land office on the Chanote at the time of the title transfer. You may also add your name to the Chanote as joint owner with your Spouse upon presentation of your marriage license. A Usufruct is similar to a life estate over any structures built over the land. In essence it gives you the right of sole possession of any structures built on the land for the period of your lifetime. It cannot be devised and expires upon your death leaving the sole ownership of the house and land to your spouse. There are other safeguards to your investment which Udon Home Sales can review in conjunction with our attorney at the time of the land and house purchase.
In the case of a girlfriend, the restrictions on creating enforceable contracts are somewhat mitigated. There are two approaches here worth considering. One is to register a mortgage at the land office for the purchase price of the land. This will restrict the girlfriends ability to sell the land and house until the mortgage is paid off to you and you release the mortgage. At the same time, you privately enter into a lease agreement with her which gives you the right of possession of the property. The second approach is to record both a mortage and a Usufruct in your favor. Udon Home Sales can advise the pros and cons of each of these approaches and will assist in making your home purchase a happy event for the both of you. Our experienced attorney will prepare all necessary documents for a nominal fee.
Using a Nominee -- Nominees can only be used to secure leases, not for freehold ownership purposes. Any attorney can serve as your nominee or you can select a trusted Thai citizen friend, or a girlfriend. In this case, you would put the title to the land in the name of the nominee. The nominee can then enter into a long term lease agreement with you, typically 30 years which gives you sole possession of the property. You also want to ensure that the agreement includes clauses which state that you own all structures over the land, that the nominee gives you the right to buy the land should the law in Thailand change during the period of the lease, and that the nominee will sell the lease to any person whom you designate for the remainder of the term of the lease. You may also be able to obtain one additional 30 year extension on the lease and devise the remainder of the term to your heirs. At the end of each term, both the lessor (nominee) and lessee (foreign buyer) must register the renewal with the Land Department and pay government fees, and other expenses, such as stamp duty. You may also want to consider registering a mortgage in your favor for additional protection and leverage with the nominee. Udon Home Sales and our attorney can advise the benefits of this approach.
Property Ownership by a Corporation -- This was one of the most popular methods of property ownership by foreigners, however recent changes in the law have made this a much more difficult and expensive proposition. Both partnerships and companies also fall under the strict land ownership by foreigners' prohibition - should the foreigners control too large a share. The Alien Business Law, which regulates the investment in land by foreigners, states that "land trading" is prohibited to foreigners. A foreign-controlled company is defined under Thai land law, and states that any Thai registered companies or partnerships with more than 49% of the company's total capital, or more than half the shareholders being non-Thai, are considered foreign. It is often difficult for even a company with a 51% Thai/49% foreign ownership to purchase land - particularly if you are using an inexperienced lawyer. The typical process is to form a corporation using 6 Thai shareholders holding the 51% company stock and you holding the 49% minority portion. You then obtain the power over the corportion as the Managing Director with all power of sales and management of assets. Note however that as Managing Director, you will need a work permit and will have to pay taxes in Thailand. Udon Home Sales has a professional experienced lawyer on hand to ensure acquisitions are made legally and expediently whenever foreign ownership is in question. Being a company, there will be ongoing accounting and legal fees payable. The company is normally sold as part of any sale of the property to another foreigner or the land and structures may be sold by the company to a Thai buyer. This is a good way for a foreigner who wants to play the field without any lasting ties to any one girlfriend to live in a very nice home while at the same time, strenghthening ties to Thailand should he wish to some day apply for permanent residence here.
Mortgages
Foreigners married to Thai spouses who have recurring income from their home country (such as private or government pensions) or annuities, or who have income from foreign corporations they control can obtain a mortgage in the amount of 50% of the appraised value of the land and structures. Udon Home Sales has experiernce with several banks in this regard and has already obtained mortgages for some of its foreign clients. The mortgage is made in both names, so the credit history of the Thai spouse needs to be good (no judgements or repossessions due to failure to pay notes due on motorcycles, cars etc).
Wills
An often-ignored aspect of Thai property ownership is to register your Will here. Not doing so means huge problems for your Executors and Beneficiaries, even if you have created a cast-iron Will overseas. If you plan to purchase or have purchased property, please make a will. The best advise is to make one Will in Thailand which covers your assets in this country and a separate Will which covers your assets in your home country. Udon Home Sales has an experienced lawyer who can create a Will for you immediately following any property acquisition. This will protect your Thai spouse or girlfriend as well as any offspring.
Taxation
At the time of the title transfer at the Land Office there are many taxes due and payable. Typically these are divided 50%-50% between Buyer and Seller, but this is completely negotiable at the time of the establishing the selling price and contract for purchase of the property.
The general combined government taxes payable on a sale for property held less than 5 years (Transfer Tax, Transfer Fee, Income Tax and Stamp Tax) are about 5.5% of the land value - as set by the Land Office or the stated value of the sale (whichever is greater). However, until March 31, 2010, the Thai government has suspended the income tax portion which reduces the total tax to about 2.5 – 3% of the assessed or purchase price whichever is greater. Even after this suspension expires, for property held 5 years or more by the prior owner the income tax is very small making the total tax bill about 3% of the assessed or purchase price.
On an ongoing basis, there are two main taxes applicable on property owners in Thailand, Land Tax and Structures Usage Tax. The Land Tax is a very small tax levied on land ownership equivalent to just a few Thai Baht per Rai per year. Structures Usage Tax is applicable to commercial buildings, shop houses and apartments. As such these taxes are not applicable to single family owner occupied homes except for very large plots of land.
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